1.Which of the following statements about limited companies in Hong Kong is/are correct?
(1)A limited company is a separate legal entity.
(2)Limited companies enjoy a lower profits tax rate than sole proprietorships.
(3)Limited companies are required to publish their financial statements in a newspaper.
A.(1) only
B.(2) only
C.(1) and (3) only
D.(1), (2) and (3)
2.If an investor wants to complain about the misconduct of his broker in a share transaction, which of the following organisations should he turn to?
A.Hong Kong Monetary Authority
B.Securities and Futures Commission
C.Hong Kong Exchanges and Clearing Limited
D.Investor Compensation Company Limited
3.Which of the following are benefits of being a socially responsible business?
(1)lower production costs
(2)better business reputation
(3)attraction of customers who are also concerned about social responsibility
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
4.Which of the following statements about the Mandatory Provident Fund (MPF) system is correct?
A.Self-employed persons are not required to enrol in an MPF scheme.
B.Employees covered by the MPF system are required to contribute 5% of their income.
C.Employees can choose to make extra voluntary contributions in addition to the regular mandatory contributions.
D.MPF scheme members can withdraw their accrued benefits when they reach the age of 60.
5.It is a firm's practice to record free samples given to customers as promotion expenses. At the year end, the owner of the firm took some free samples for his personal use. According to the ______concept, these free samples should be treated as ______.
A. business entity ...... promotion expenses
B. business entity ...... drawings
C. consistency ...... promotion expenses
D. consistency ...... drawings
6.Which of the following statements about small and medium enterprises (SMEs) in Hong Kong are correct?
(1)An SME employs fewer than 50 persons.
(2)SMEs contribute a majority of employment opportunities in Hong Kong
(3)SMEs often provide products and services that complement large companies.
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
7.Which of the following are participants in the financial market?
(1)listed companies
(2)commercial banks
(3)securities brokers
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
8.Which of the following statements about credit cards are correct?
(1)A credit limit is set.
(2)A minimum payment is set for the outstanding balance.
(3)Interest will not be charged on the remaining balance if the minimum payment is made before the due date.
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
9.As at 31 December 2013, Quinton Company had current liabilities amounting to $60,000 and its current ratio was 3:1 and quick ratio was 2:1. What was the amount of its inventory on that date?
A.$60,000
B.$120,000
C.$180,000
D.$240,000
10.In the trial balance, if the total of debit balances is larger than the total of credit balances, it means that ______.
A.there is a loss for the year
B.there is an error in the double entries
C.there is insufficient capital to run the business
D.the amount of total assets is larger than the total liabilities
11.A business earns a gross profit margin of 25%. Calculate its sales amount based on the following data:
Item / $Opening inventory / 10,000
Closing inventory / 4,000
Purchases / 51,000
Selling expenses / 1,500
A.$69,375
B. $71,250
C. $74,000
D. $76,000
12.Which of the following statements about the securities market is/are correct?
(1)Investors can buy and sell securities in the primary market.
(2)The secondary market comprises the listed exchanges and the over-the-counter market.
(3)A listed company may issue new shares to raise funds through the securities market.
A.(1) only
B.(2) only
C.(2) and (3) only
D.(1), (2) and (3)
13.Elsa plans to use the net present value to decide whether to buy a piece of office equipment. Which of the following pieces of information does she need to make the decision?
(1)cost of capital
(2)cashflows arising from the acquisition and use of the office equipment
(3)scrap value of the office equipment at the end of its useful life
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
14.What is the flow of an accounting cycle after the books of original entry?
(1)balancing day adjustments
(2)financial statements
(3)ledgers
(4)trial balance
A.(1)→(2)→(3)→(4)
B.(2)→(3)→(4)→(1)
C.(3)→(4)→(1)→(2)
D.(4)→(3)→(1)→(2)
15.Which of the following is/are example(s) of economic factors that might affect the business of a jewellery shop in Hong Kong?
(1)There is an increase in the income and consumption power of mainland tourists.
(2)The mainland government allows residents of more cities to come to Hong Kong for individual visits.
(3)The cross-border transport facilities are improved.
A.(1) only
B.(2) only
C.(1) and (3) only
D.(2) and (3) only
16.On 30 December 2013, a firm bought a motor van and made a payment of $150,000 by cheque. The van's list price was $243,000 and a trade discount of $15,000 was given. As at 31 December 2013, its market value had fallen to $200,000. The van should be recorded at ______in the statement of financial position as at 31 December 2013.
A.$150,000
B.$200,000
C.$228,000
D.$243,000
17.Mr Chan is the general manager of a large supermarket chain. He sets a target for the chain: "We will increase the sales volume of the Kowloon are by 10% as soon as possible." Which of the following criteria for setting good objectives is/are NOT met in this target?
(1)specific
(2)time-bound
(3)measurable
A.(1) only
B.(2) only
C.(1) and (3) only
D.(2) and (3) only
18.How will an increase in discounts received affect the gross profit and net profit?
Gross profitNet profit
A.unchangedunchanged
B.unchangedincreases
C.increasesunchanged
D.increasesincreases
19.Which of the following accounting ratios can be calculated when only the income statement is provided?
(1)net profit ratio
(2)quick ratio
(3)return on capital employed
A.(1) only
B.(2) only
C.(3) only
D.(1) and (3) only
20.______are external users of financial statements who focus on the liquidity and solvency of the firm.
A.Managers
B.Customers
C.Competitors
D.Lenders
21.Which of the following are advantages of management by objectives (MBO)?
(1)It reduces paper work.
(2)It enables better control of subordinates' work progress.
(3)It helps to enhance coordination between different levels.
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
Consider the following case and answer Questions 22-23:
Horace worked in an information technology firm for a number of years. Last year, he resigned and set up his own business providing computer repair services. His service is highly appreciated by customers but some of them comment that Horace often uses technical jargon, which they find hard to understand.
22.Which of the following are the entrepreneurial characteristics demonstrated by Horace?
(1)seek new opportunities
(2)desire for independence
(3)receptive to innovative ideas
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
23.According to the comments of Horace's customers, Horace has violated the ______principle of effective communication.
A.clarity
B.completeness
C.concreteness
D.conciseness
24.Which of the following is an example of using quality business information to make a decision?
A.buying shares based on the comments of a bank teller
B.buying foreign currencies according to the recommendations of a financial newspaper published the previous week
C.buying a mobile phone after reading users' reviews on the internet
D.buying air tickets after reading the relevant terms and conditions on the airline's webpage
25.Conducting questionnaire surveys to understand customers’ needs is a part of ______.
A.operations management
B.marketing management
C.information management
D.risk management
26.An asset is classified as a current asset on the statement of financial position if it ______.
A.was purchased on credit more than 12 months ago
B. was purchased in cash in the last 12 months
C. is to be sold within 12 months
D. is to be used for over 12 months
27.Which of the following financial products carries the highest investment risk?
A.savings deposits
B. time deposits
C. preference shares
D. ordinary shares
28.Maintaining a good personal credit records is important because it will ______.
(1)lower the cost of loans
(2)increase the chance of getting loans
(3)increase the upper limit of 70% on mortgage loans from banks
A.(1) and (2) only
B.(1) and (3) only
C.(2) and (3) only
D.(1), (2) and (3)
29.Miss Lee drew a personal cheque to pay an electricity bill for her business. Which of the following double entries for the business is correct?
DebitCredit
A.drawingscash at bank
B.drawingscapital
C.electricity expensescash at bank
D.electricity expensescapital
30.Which of the following statements about Asia-Pacific Economic Cooperation is correct?
A.It provides loans to developing countries in the Asia-Pacific region.
B.It supports sustainable economic growth in the Asia-Pacific region.
C.It settles trade disputes among countries in the Asia-Pacific region.
D.It issues certificates of origin for products manufactured in the Asia-Pacific region.
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